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Wednesday, December 11, 2013

Montenegro Airlines debt nears 70 million

Montenegro Airlines’ debt increases as practices of nepotism continue

Despite rising passenger numbers and ongoing cost cutting measures, Montenegro Airlines’ debt has reached 68.980.608 euros. The Montenegrin carrier owes the most to the airports in Podgorica and Tivat - up to 12.8 million euros, followed by 12.7 million to the Serbia and Montenegro Air Traffic Services Agency. In March 2012, the Montenegrin government agreed to write off some of the debt owed by its national carrier, however, the exact amount has never been specified nor has the government kept its promise. In addition, the airline has had to revise previous financial results after the State Audit Institution found the previous management covered up 2.5 million euros in debt by withholding parts of its losses from its financial reports.

The current management at Montenegro Airlines says it has gone to great lengths to cut costs and reduce the carrier’s debt. “All expenses have been significantly reduced especially when it comes to fuel, airport services and catering. In addition, expenses on business trips, accommodation, marketing and telephone use have been reduced. The number of seasonal workers has also been cut, pay checks have been modified and a decision has been made to close all unprofitable international sales offices”, the airline said. It added, “This way we have achieved significant savings in the second half of 2013 amounting to some 2.5 million euros, indicating the airline is on the right path”. Montenegro Airlines intends to launch flights to Dusseldorf next year and is expected to take delivery of a new Embraer jet in 2014.

However, despite attempts to cut costs, Montenegro Airlines’ management recently approved bonuses for various employees, all of which proved to be members of the ruling Democratic Party of Socialists (DPS) or family members of government officials. They include Commercial Director Predrag Marković, who is the son of Deputy Prime Minister Duško Marković, as well as Montenegro Airlines Agency Coordinator Gorica Lalićević, daughter of Duško Lalićević who is member of Montenegro Airlines’ Board of Directors and head of the Montenegrin Tennis Association, as well as a former Justice Minister in the government. In addition, bonuses have been approved for Marko Vukčević, Advisor for the Austrian, Swiss, Italian and Central European market, who is the son of former high tanking DPS member and now President of the Constitutional Court of Montenegro Mladen Vukčević. Bonuses have also been approved for Tijana Kavarić, head of the airline’s Media Center and wife of Montenegro’s Minister for Economy Vladimir Kavarić. Employees have expressed great dissatisfaction with the recent allocation of bonuses which almost exclusively went to party faithfuls. Meanwhile, the airline has named Vojin Vlahović as its new Exectuive Director. Mr. Vlahović has up until now been the Montenegrin Ambassador to Italy and has served as the advisor to the Prime Minister.

Air Serbia/JAT's debts are 270 million, so what if MA has 70 million, if state is behind them there's a good chance they'll continue to operate.

Clearly corruption has great deal to do with what's going on in all airlines with in EX-YU, a really bad corruption, mafia style and scale.

BTW, just in case you think Ethiad will repay Ai Serbia's $270 million debt you got another thing coming, part of the deal is for Serbia to to pay that and knowing how politics works in Serbia, Air Serbia might as well go down in history as a first start up national airline that went bust in less than a year of operation.

The problem is one day the entire party state model which is used in almost all Montenegrin state owned companies will collapse and with it those companies. It is shocking that such a small airline could have such huge debts but its ok for now. The minute they start falling back on payments to Eurocontrol their faith is sealed.

Still is, Air Serbia still owes $270 million that it needs to pay back, and debts are piling up and piling up, although Ethiahd will lease 10 of its airbus aircraft for next to nothing to Air Serbia, someone has to pay the outstanding $270 million debt + interests.

I'm sure Serbian taxpayers won't, its not their fault JAT was run to the ground, I guess as Serbia becomes more democratic (once is becomes) questions will need to be asked and individuals responsible would need to be prosecuted for corruption and scam.

Yeah right, $270 million will be paid by the EU or perhaps the Chinese, Oh no, Arabs will pay these $270 million.

Wake up man, these 270 million are on Air Serbia books and they'll need to pay it back, how its up to Air Serbia and Serbian government to work things out.

Just in case you believe the spill of some politician who said that Air Serbia won't inherit $270 million worth of JAT's debt, let me hold you there for a second. $270 million is a debt that can't be transfered to Serbian people as for that you'd need an act of parliament, unless in Serbia things are totally undemocratic and one minister can decide on things without consent of the people, sort of the way things where done under Milosevic.

On top of that Air Serbia wouldn't inherit JAT's slots, codes and what not if it was entirely new airline. JAT was just re-branded in to Air Serbia and that's that, debt is still there to be paid off, debitors still need to be paid their 9% interest per year or around 24 million per year.

Reason why Air Serbia's days are numbered, if Air Serbia can't make profit in next 3 years Ethiad will wash its hands of Air Serbia and walk away with losses, they can afford it, Air Serbia can't.

So when you laugh at Montenegro Air, laugh at Air Serbia as well, for you're in same shitty situation, you want to paint spray shit with gold its entirely up to you, shit is still shit.

Yes, Air Serbia's brand new management is the same as the one of Montenegro Airlines. Are you seriously for real?!

And since my comment was deleted, which I don't understand why the one above was left since mine was in the same league, I will add once more that during the summer the Serbian parliament voted on a resolution to take over Jat Airways' debt. So there you have it. The process was in accordance with democratic principles.

95% of Jat's debts belong to state-owned companies, whic means Republic of Serbia owes that money to itself. Some 30% belong to big state banks liquidated long ago. I would not bet this debt would be any burden on Air Serbia.

Aviogenex supposed to receive these airplanes and begins as a charter airline or even ¨low cost¨.If I'm not mistaken Aviogenex has applied to operate direct flights from Nis, but have not received government approve so they were forced to operate for some African airline in Benin.Btw, those airplanes are state owned and they can do with them whatever they want actually!

Does anyone know how the whole B&H Airlines Air Serbia deal will work? I mean, the only codeshare there is on the flights between Sarajevo and Belgrade. JA's flights are not incorporated into Air Serbia's network when booking flights. Will this change or are we witnessing another disasterous attempt of B&H Airlines at serving Belgrade?

I think that Air Serbia has scheduled the B737-300 to Sarajevo from before. I suppose with all these additional flights they can fill the plane. Mind you, in summer they will operate double daily flights. I suppose they need the Atrs for Bucharest and Banja Luka. Mind you, Skopje was also operated by an A319.

That's very good then. These flights were not loaded the other day when I checked. This is really good and it's especially good for B&H Airlines which can have a short route always filled to the last seat.

Corruption and nepotism at its worst. I just don't understand where do they get all this money to sustain all those ambassadors, CEOs, and some of the positions that have no sense. It's a very small country, mostly rural, with almost no industry. They can't survive just of tourism either. I mean it's Montenegro, not Monte Carlo. Unless the government is involved in some dirty jobs like cigarette and drugs trade, I really don't know where else they would be getting all this money to afford this lavish lifestyle.

I think that will be it's final nail in the coffin. I wouldn't mind to be honest as that will mean the liberalization of the air travel between Montenegro and Serbia which means Wizz Air will finally be allowed to operate flights! I am sure they could run daily A320 between both Podgorica and Tivat.

AUH is one of the worst airport experiences I have ever had. The terminal is over crowded to the point that even IST looks (and feels) spacious. The waiting areas at the gate was inadequate for a A320, I can only imagie for the B777 or the A380 which they are to recieve soon. The smoking room was full of smoke to the point that the glass was dimmed and the smell extended into the terminal when the door was opened. Quick summary was it was hideous, crampped and overcrowded.

Judging by the new Darwins/Etihad REGIONALs S14 timetable, there are no connections available from BEG through GVA, so I would say that the route will be used for some connecting passangers from GVA through BEG. Timetable speaks for itself.

Neither connections in GVA nor in BEG possible. All regional flights depart between 14 and 14.30. Darwin arrives 14.45 in BEG. You probably don't think that someone from GVA will fly to Paris or Brussels via BEG?!?

Maybe the best alternative schedule will be to have the plane arrive at night and then depart in the morning. Like that they could connect onto night flights which do not affect Etihad such as Athens, Thessaloniki, Sofia, Varna, Larnaca, Beirut, Moscow, Skopje...

The other logical reason for this schedule is that they are ready to bleed some money until they force out one of the competing airlines out of the market. Personally, I fear it might be Swiss- I assume their cost structure is less favourable in this case when compared to easyJet.

By the way, does anyone know if Croatia Airlines has done something about their own Rome flights now that they have competition?

I think we are yet to see the full extent of the changes to the Air Serbia timetable. Aircraft are still yet to arrive, and the aircraft that will remain havnt been rebranded into the Air Serbia brand. The company is still too much Etihad dependant. Etihad crew who fly to BEG recieve both Air Serbia and Etihad uniforms for its several day long trips to BEG as they fly onwards ex BEG as Air Serbia crew before returning to AUH as Etihad crew. It is still a mess thanks to Etihad introducing a type of aircraft that no Jat crew had been trained for. Some Etihad crew flying for Air Serbia are based in BEG (ie: the crew with Serbian passports who work for Etihad) while others are based in AUH. 1-2 hour flights to ATH and DUS for example is a layover destination to Air Serbia rather a turn around as before. The real results will be evident early next year once the transition for Jat crew is complete.

Three in the morning wave of departures plus the fourth one which will be flying to Abu Dhabi. As of today the entire JU fleet is up and running. Morning wave includes 10 departures. I think Belgrade will become a serious player only when it reaches 15 to 20.

Last year in January the airport saw a 20% passenger increase. It will be interesting to see the numbers in 2013 since destinations such as Istanbul, Athens, Thessaloniki, Stockholm will see additional flights by Air Serbia and easyJet will be also launching its flights from Geneva.

From what I heard, the A320s are supposed to arrive in March. If anyone has more information on that it would be great.

No, that's fine if fare conditions match LX economy fare (whose lowest price is 199CHF RT). You can't find cheaper 1-stop connection to BEG than that, anyways...Call me crazy, but I don't see U2 being too successful on this route (similarly to W6 not doing so great at BSL)

Emirates are expanding in Europe next year, this was said at the Dubai Air Show and yes Eastern Europe will be the main region of focus. Flights to Belgrade, Budapest, Bucharest, Sofia and Zagreb are under the radar.

Whether or not FZ drops BEG as a result or not remains to be seen, but fares between the two will differ drastically, so EK fares-wise cannot simply replace FZ.

Unlike Etihad, Emirates can rely on a relatively large O&D market between Serbia and Dubai. As we speak there are roughly 7.000 to 15.000 Serbs living and working down there. On top of this, Dubai is extremely popular as a tourist destination for Serbs which is best portrayed by the fact that they are adding additional flights during Christmas holidays.

On the other hand, I would not be too sure they are getting ready to launch Belgrade because:

1. it's just too crowded here. Soon we will have double daily flights to Abu Dhabi, four/five weekly to Dubai and four weekly to Doha.

2. Emirates' smallest aircraft is an A330-200 which is being phased out. I highly doubt Belgrade could fill a B777-200, even less a B777-300. On top of it all, the airline doesn't have a large fleet of A330-200s, at the moment 22. Whoever flew on these birds will know how horrible they are inside. They have the old pink-ish seats with a really outdated inflight entertainment. Not the best product out there if you ask me.

3. flydubai, a lowcost airline, does not even fly daily with its B737-800. If they did not manage to position themselves here in Serbia how are we to expect Emirates to do it?

The only way I could see them launching Belgrade is as a form of a pre-emptive strike before Air Serbia does it. Yes, I believe they will eventually launch them despite already flying into Abu Dhabi.

Who knows, maybe Emirates will link Belgrade with another regional destination like Sofia or Bucharest- that could work. However, I could see them doing so only if they can get traffic rights between the cities. The real question is if the Serbian Civil Aviation Directorate will give it to them thus creating even more competition for Air Serbia/Etihad.

There is another thing I would like to add which goes in favour of Emirates launching flights to Belgrade and that's the size of its network. With so many flights to so many destinations they can capture and steal at least 70% of Turkish Airlines' passengers flying from Belgrade to Asia and Africa. Emirates' African network is far more superior than the one of Qatar and Etihad. Unlike Turkish Airlines, they operate widebodies to all African destinations which seem to be more popular with the travelling public. Then there are the Australian flights which, out of season, see around 50 passengers per day. Emirates can capture most of them by offering a one stop flight home.

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